Help me become debt free (please!)

BanishingDebt

Hi all,

I've been a keen 'browser' of the forum for a long time now, and until now have had little need to post. My finances have been good over the last few years, by which I mean, I haven't accrued any debt.

Until June 2016 I had two jobs, one full time, and one 'casual' job, which was on a Thursday night. This extra work pulled in almost £200 per month after tax, and I was happy. I was living within my means, wasn't getting into debt. I'm not saying we had everything, but I was able to pay for everything using my wages, and didn't even so much as own a credit card. This was until I was 'layed off' from my second job. I can't speak for anyone else, but £200 out of my wage was huge. I know, I should have sat down at the time and worked a proper plan out as to how I'd cope with this missing income. But I didn't. I then had a car accident (no injuries, thankfully!), and damaged my car quite badly. Rather than run through the insurance process, due to me not wanting to affect my premium, I opted to take a credit card to pay for the work. I got my hands on a 0% interest credit card and used this to pay. This was dangerous territory for me. Long story short, I started using the card to make the shortfall for the income I was missing. Bad idea, I know.

So, here I am now, in £1,600 of credit card debt, and with a £1,200 overdraft that I'm currently living in. I increased my overdraft to pay for Christmas (otherwise Christmas wouldn't have happened in my house). Now that Christmas is over, I need to knuckle down and become debt free again. The trouble is, looking at my SOA below, I genuinely can't see how I'm going to do it.

With regards to taking on extra work again. I have two young children at home (10 months and 21 months), and although I was previously working on a Thursday night, this put extreme stress on my relationship. We were at breaking point, and since I've been layed off, my relationship is much healthier. Not only that, but my partner works two days a week as a carer (12 hour shifts). On those two days, it's my job to pick the kids up from the childminders and look after them until my partner finishes work. The trouble is her shifts can be any day of the week, which means I can't really commit to working any evenings. With my partner only working 2 days, her wage isn't great too and only just covers her car and a few things for the kids. There's no option to take any of her wage to help.

So, that's it in a nutshell. I'm hoping someone here can offer a few words of advice. I feel a failure, not only because of the debt but because my children are beginning to miss out on things due to my ill managed finances.

Thanks for reading.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1328
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1328

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 405
Management charge (leasehold property).. 0
Council tax............................. 93
Electricity............................. 21
Gas..................................... 21
Oil..................................... 0
Water rates............................. 28
Telephone (land line)................... 0
Mobile phone............................ 36
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 19
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 12
Car Insurance........................... 61
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 4
Presents (birthday, christmas etc)...... 40
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Overdraft fees and account fees......... 19
Child Maintenance....................... 150
Total monthly expenses.................. 1327


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................1600......25........0
Overdraft......................1200......20........0
Total unsecured debts..........2800......45........-


Monthly Budget Summary
Total monthly income.................... 1,328
Expenses (including HP & secured debts). 1,327
Available for debt repayments........... 1
Monthly UNsecured debt repayments....... 45
Amount short for making debt repayments. -44

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,800
Net Assets.............................. 700

EssexHebridean

OK - let's take a look...

BanishingDebt wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1 You said you had a car, and your OH? This needs to say 2, and both sets of car costs need to be included to give the full picture

Monthly Income Details
Monthly income after tax................ 1328
Partners monthly income after tax....... 0 Need to include this to give a clear picture, really
Benefits................................ 0 You MUST be eligible for child benefit at the very least, and possibly other benefits. Have you checked your entitlement?
Other income............................ 0
Total monthly income.................... 1328

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 405
Management charge (leasehold property).. 0
Council tax............................. 93 If you're not already paying this over 12 months apply to do so from April. If it's currently 10 months then remember you have 2 months of this payment not going out, which may help.
Electricity............................. 21
Gas..................................... 21
Oil..................................... 0
Water rates............................. 28
Telephone (land line)................... 0
Mobile phone............................ 36 can you reduce this to sim only? How many phones is it for?
TV Licence.............................. 13 I'm going to be picky - this should be 12.12 I presume?
Satellite/Cable TV...................... 0
Internet Services....................... 19
Groceries etc. ......................... 200 For a family of 4 that's pretty good - well done!
Clothing................................ 0 nothing at all? not even the occasional new pair of pants or some socks? :eek:
Petrol/diesel........................... 80
Road tax................................ 12Are you paying this in monthly instalments?
Car Insurance........................... 61 Is this after declaring the accident to your insurers? If not expect an increase at renewal - sorry! Have you checked this is the best price you can get as it seems quite expensive
Car maintenance (including MOT)......... 20 Where is this being set aside - you're not showing any cash assets?
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 You need this - it'll cost you under £10 a month but it's a must-have
Life assurance ......................... 0
Other insurance......................... 4
Presents (birthday, christmas etc)...... 40 You need to cut this back for the time being I'm afraid. how old are the kids?
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0 You need to find a way of building this
Overdraft fees and account fees......... 19
Child Maintenance....................... 150 I take it there is another child living with an ex?
Total monthly expenses.................. 1327


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................1600......25........0
Overdraft......................1200......20........0
Total unsecured debts..........2800......45........-


Monthly Budget Summary
Total monthly income.................... 1,328
Expenses (including HP & secured debts). 1,327
Available for debt repayments........... 1
Monthly UNsecured debt repayments....... 45
Amount short for making debt repayments. -44

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,800
Net Assets.............................. 700

You have to both explore the option of benefit entitlement AND look to increase income, in my opinion. An easy way you can BOTH make a bit of cash is by doing surveys etc. There's threads on the Boost Your Income board about the various options - and while it won't earn a lot, it will help a bit. I also think you need to sit down together and get all your finances together - your OH needs to start taking "ownership" of the situation alongside you - you've both spent the "lost" money, now you both need to pull together to work through it.

Oh - and cut up the credit card, right now!

Good luck - you can sort this, but increasing income is key.

ps - reading back again, it sounds horribly as though you've NOT declared that accident to your car insurer. I hate to tell you, but even if you elect not to claim, you need to do that. When you come to renew, you have to confirm that you've not had any accidents in the previous X (usually 5) years - if you say "no" to that, then when caught, you're in a lot of trouble...

National_Debtline

Hi and welcome to MSE,


You have taken a really positive step by posting on here so please try not to be too hard on yourself. The initial thing I noticed from your post was that you said your partner wages covered the car expense (and a few things for the children) but on your sole SOA you have budgeted for the car insurance, petrol, tax and MOT to a total cost of £173 per month. However, if your partner is paying this then that is money you can immediately put to your debts.


Be careful of this, it is a common mistake, if you are doing a sole budget, with only your income then it is only your expenses you will list. However, if you are doing it as a family then it is all of the income (benefits and tax credits included) and all of the expenses. Have you made sure you are claiming all of the relevant benefits with an online assessment?


Check your SOA and see if a joint budget may be the solution before you start trying to renegotiate with either creditor. And change your bank account away from the overdraft (and credit card) for a fresh start. It will keep your money safe from the creditors and make budgeting easier.


Laura
@natdebtline

tlc678910

Hi,
I wondered how much your childcare actually costs? You describe collecting your 2 small children from a childminder and your partner working a couple of 12 hour days each week but you have only put down £100 a month.

Does your partner also pay for the childcare?

I think you need to look closely at what your partner earns and how much you pay in childcare so you can consider what they actually bring in.

An online calculator suggests if your partner earns minimum wage of £7.50 over 24 hours they would take home around £767 (before any pension contribution). If your total childcare is £300 their work is only bringing a net benefit of £467 and also due to its unpredictable nature limiting the work that you can do. Assuming your post is a Monday to Friday type job if your partner could find a job where for example they did Fri and Saturday nghts 12 hours caring they could keep every penny as you could provide childcare as well as probably earning a supplement for working nights. If they only found a job with less hours they may still have the same benefit as no childcare costs.

I think in the circumstances of your family finances you need to start pulling together on your finances. It sounds a little bit like you are saying your partner spends their money (possibly the child benefit too?) but the amount they receive is significant in the context of your family finances and you should also not carry all the worry alone.

You mention losing the £200 from your second job in summer 2016 but I suspect the strain is a little greater than this suggests as I think your childcare costs have also increased since then following the birth of your second child.

Speak to your partner and ask them to work with you to consider how you can increase your family income, possibly by lowering those childcare costs.
Good luck.
Tlc